Asia Daily PP PE Report 9 May 2016

In China, the stubborn weakening trend in futures trading drag into this week after four straight loosing sessions recorded last week. Contract number 1609 for PP on Dalian Commodity Exchange loses CNY89/ton ($14/ton) while LLDPE contract slashed another CNY75/ton ($12/ton). Both contracts settled at CNY6644/ton ($875/ton without VAT) and CNY8035/ton ($1055/ton without VAT) respectively.

Domestic suppliers continue to down adjust spot offers by CNY50/ton ($8/ton) for PP and CNY50-100/ton ($8-15/ton) for PE with hope to stimulate the inertia demand. A trader in Linyi said, “We are open to negotiation with serious buyers. Weakening futures market is having such adverse impact on buyer psychology and this might put market under pressure in the near term.” At the same time, the source does not expect any drastic swing in prices since many suppliers are trying to hold firm stance on their cargoes

In the import market, some discounts are observed for both PP and PE, especially prices at the higher end of the overall price range. A Saudi Arabia producer cut homo-PP prices by $30-35/ton compared to last week at $990/ton CFR China, LC AS term with a buyer responded, “Our buy idea is at $40/t lower. We are still having some cargoes on hand which we plan to deplete in the coming days. Our international suppliers are still not in the mood to accept buyers bid in spite of lethargic demand due to lack of sales pressure and firming upstream costs.”

A major Thailand producer meanwhile cut HDPE and LLDPE film prices by $20-30/ton from last week at $1190/ton and $1250/t respectively, CFR China LC AS term. Buyer respond is not as good as expected as buyers claim limited buying interest in the domestic market.       

In Southeast Asia, market sentiment is strangely quiet and byers are shy away from making fresh purchases on the first day of the week given high level of uncertainty. A Thailand producer announced fresh HDPE prices to Vietnam today for June delivery at $10/t reduction compared to last week at $1210/t CIF, LC AS term. Source from the producer commented, “Many of our customers are placing bid as low as $1150/t for HDPE cargoes offered with expectation to see speedier reduction in the near term. We are not having large quantity this time, yet we are not very confident about the near term outlook.”

In Indonesia, a major local producer has lifted HDPE film price by approximate $8/t compared to last week, yet buyers reported receiving larger discount in the distribution market in the face of sluggish demand. “There is very little support for upward price movement since converters are preparing to lower production rate ahead of the fasting month,” a market source added.

There is very little activities observed in the PP market with only couple of major producers opened new prices at stable levels from the last offers. A major Indian maker maintains homo-PP offers unchanged at $1040/t CIF Vietnam, LC AS term, however, buyers can obtain same cargoes in the open market at $10/t lower. A buyer commented, “Traders are generally not confident in making purchases at this levels. Domestic market is very quiet today and some sellers are cutting margins to sell quicker.”

Regional buyers are expecting a relatively stable trend in the PP market in the near term claiming limited supply as the primary support. A trader said, “We are not expecting any significant changes in the import PP prices in the near term. However, domestic homo-PP prices in Indonesia has been increasing too quickly previously and it might need some correction now.”